Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
There has been a number of posts regarding whether you find deals on the MLS. Let me give a perspective on this strategy. I have purchased the last 8 properties on the MLS with the BRRRR strategy. I can out bid the Fix N Flippers, because I am holding the properties and by adding value I can build equity into the projects. I use private funding, rehab the property, place a tenant in the property, refi with commercial loans and repeat the process. The key is knowing your market (expert) so you can run your numbers. Knowledge is the key.
Investor · Portsmouth, VA · Member since 2016 · 289 posts · 107 votes
9y
I am doing this also. I am almost done with the "rehab" phase of my first rental. Hoping to refinance soon. I found my property on the MLS. It had been listed for about 6 months last year, was taken off the market, then relisted this year. @Kenneth Garrett How long did you have to hold you properties until the re-finance? Most banks are telling me 12 months. I found a guy that says they'll do 6 months. Have you refinanced any sooner than 6 months? What kind of "commercial loans" are you using? Do you have to have the titled vested as an LLC to use a commercial loan?
Real Estate Agent · South Berwick, ME · Member since 2016 · 2 posts · 1 vote
9y
Hi Kenneth,
Are you a real estate agent? What are you typically looking for on the MLS?
How was the process securing a commercial loan on your first buy/hold?
I am looking to do something similar and any advice would be welcome.
Thanks
B
I am not a Real Estate Agent. I find my properties on Redfin and Zillow. I sign up for the alerts based on my specific criteria. I use the commercial loans as a refi. The criteria for approval is based on the project. Does it cash flow. Make sure you calculate your DSCR; has to be 1.25 or better. I find the commercial loans are much easier to get approved. The interest rate is a little higher but the process is much easier.
Realtor · Smyrna, TN 37167 · Member since 2013 · 248 posts · 147 votes
9y
I like it - very similar to what we've done. In our area the less expensive properties listed on the MLS move so fast, by the time Zillow knows about it it's under contract. So, you have to have your financing lined up and be ready to make an offer quickly.
I'm considering this strategy to purchase my first entry level town house or condo. any advice on getting properties that have been on the market for more than six months?
Investor · Portsmouth, VA · Member since 2016 · 289 posts · 107 votes
9y
I am doing this also. I am almost done with the "rehab" phase of my first rental. Hoping to refinance soon. I found my property on the MLS. It had been listed for about 6 months last year, was taken off the market, then relisted this year. @Kenneth Garrett How long did you have to hold you properties until the re-finance? Most banks are telling me 12 months. I found a guy that says they'll do 6 months. Have you refinanced any sooner than 6 months? What kind of "commercial loans" are you using? Do you have to have the titled vested as an LLC to use a commercial loan?
There is no waiting period (seasoning) for commercial loans. I refinance them in 90 - 120 days once I complete the rehab and have tenant in place. Having the tenant in place makes the process smoother as you have a producing asset when you refi. It must cash flow positively. My goal is a minimum of $300. I'm usually around $400.
Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
9y
How do you calculate DSCR? Is it rental income / PITI ? Or do all expenses (maintenance, vacancy, capex, owner paid utilities, etc) get added to PITI ?
How do you know the PITI amount before you have the loan terms?
Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
9y
Typically you need to be agent. An agent can appoint you as an assistant to allow you access. I work with an agent, but I typically use Redfin and Zillow to find deals.
Investor · Miami, FL · Member since 2016 · 75 posts · 23 votes
9y
The MLS has been good to me. My last three properties came from the MLS. However, I went through the conventional pathway. @Kenneth Garrett what lender do you use and/or would you recommend? To raise money is an art.
I use a local bank. I find it much easier to work with small local banks then the large nationwide corporate banks. Yes, raising money is definitely an art. It takes time to build rapport and trust with people.
Debt Service Coverage Ratio. NOI/P&I. Rent - taxes - Insurance - vacancy - mgmt. - maint, etc (NOI). Example 1000/600(P&I) = 1.67. Need at least 1.25 for the banks. The higher the better.
Investor · San Francisco, CA · Member since 2017 · 24 posts · 12 votes
9y
Anyone have success with BRRRR in the more expensive areas? Starter homes in the bay area are typically $600K and up and don't really cash flow at that price.
Hi Matt, I think most people in your situation probably invest out of state. The numbers are difficult to cash flow. Check out noradarealestate.com. They are a turnkey provider of properties. Indianapolis, Kansas City, Memphis, etc.
Surveyor · Hemet, CA · Member since 2015 · 797 posts · 112 votes
9y
@Kenneth Garrett great thread! I am also a first time investor and I'm looking for deals on redfin Zillow anything really. I need to start comparing and writing down rents per how many houses or square footage.
There are some challenges today as the market has recovered and in some cases is over inflated. Some markets have gone to high to fast. Pick your spots. I just closed on a 4 unit. Less competition then SFH but certainly a different market and how you analyze. Its just under the commercial qualifier (5 units or more). I still use commercial loans. As long as it cash flows, the added value makes sense and I can increase my NOI, it works. I then refi the property. This allows my private investors to be paid back relatively quickly and they can invest in the next project.
Surveyor · Hemet, CA · Member since 2015 · 797 posts · 112 votes
9y
@Kenneth Garrett thanks for the reply. I was at my first real estate meeting two nights ago and I sold with a well known investor here locally and he says he doesn't even look at the asking price he just makes a phone call and make an offer! I wanna be like him!
Hi Robin, I agree. Asking price is irrelevant. After you analyze the numbers that is all that is important. I look for properties that have been on the market for awhile or are reactivated. I generally do not have luck on new properties hitting the market. Too much competition. Look for ways to provide added value and be an expert in your market. Being an expert in your market is where I generally find the ability to make offers at a price the competition doesn't understand. Added value is where it's at.
Surveyor · Hemet, CA · Member since 2015 · 797 posts · 112 votes
9y
@Kenneth Garrett thanks this a great thread let's keep it going. Come out to California sometime help me find deals and help me invest haha! Plenty of sunshine and deals and high rents for our tenants!
Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
9y
On the BRRRR strategy I take a different approach. I will rehab at a higher end. It results in better tenants and higher rents. It also gives the ability to flip the property for an additional strategy (have not done this yet). At this point I am in the acquisition stage. I use Stainless Steel Appliances, rehab kitchen and bath; its sale ready.
I then can refi my money out and repeat the process.
Rental Property Investor · Miami, FL · Member since 2016 · 72 posts · 26 votes
9y
@Kenneth Garrett the BRRRR strategy is the holy grail of REI. I have soon come to realize that and would love to begin ASAP. I live abroad and don't know 1) if it's even possible to oversee rehab projects from abroad and 2) how the heck to get started! Did you have any experience in flipping before using the BRRRR? Also, would you recommend using my own cash to purchase/rehab for the first BRRRRs until I'm well acquainted with the process? This will minimize risk in case I can't pay back the HML because of a rehab project not going as smoothly as planned. BTW great tip on refi using commercial loans. I just recently read it's not as complicated to obtain as many think.
Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
9y
@Account Closed
I've done a couple flips, but I prefer to hold property. I think investing abroad requires someone you trust to oversee things (boots on the ground). Trying to do rehab projects a few hours away or states away is a challenge. Abroad I think would be similar. I tend to stay within an hour of where I live.
I agree on using your own money if you have it, but don't let money stop you from investing. Educate yourself with the process and most importantly your investment market. Become an expert in your investing market. This is an important key to becoming successful. The numbers tell the story and don't twist the numbers to fit the project. Either the numbers work or they don't. Don't force it.
I enjoy the commercial loans. Less about you and more about the project. They are more interested in the project numbers. Property is held in a business entity (LLC's for me). You will pay a little more in interest, but its worth the asset protection.